A Tennessee man and his family used much of the $187 million it collected for cancer patients to buy themselves cars, gym memberships and take luxury cruise vacations, pay for college tuition and employ family members with six-figure salaries, federal officials alleged Tuesday in one of the largest charity fraud cases ever, involving all 50 states.
The joint action by the Federal Trade Commission and the states says James T. Reynolds Sr., his ex-wife and son raised the money through their various charities: The Cancer Fund of America in Knoxville, Tennessee, and its affiliated Cancer Support Services; The Breast Cancer Society in Mesa, Arizona; and the Children's Cancer Fund of America in Powell, Tennessee.
The charities hired telemarketers to collect $20 donations from people across the country, telling consumers that they provided financial aid and other support to cancer patients, including pain medication, transportation to chemotherapy visits and hospice care.
But little money made it to cancer patients, as the groups "operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation" with none of the controls used by bona fide charities, the FTC said Tuesday.
Anyone who donated money to these groups shouldn't expect a refund anytime soon. While litigation against Reynolds Sr. and the Cancer Fund of America is ongoing, the settlement agreements with Reynolds' son, ex-wife and a long-time associate of the family — Kyle Effler — notes that much of the money has already been spent. The agreement bans the three from fundraising and shuttered their organizations.
"The money is mostly gone," said Jessica Rich, director of the FTC Bureau of Consumer Protection. Rich declined to say whether a separate criminal investigation might be underway, noting only that the regulatory agency doesn't have that authority.
$187 million bucks worth of fraud. Why, those are almost Bank of America numbers if you add a couple of zeroes or so.
Seriously, you scammed people for cancer patients, twenty bucks at a time, and made that much off of it. Amazing stuff, frankly. And of course, the money's all but gone. Oh well.
Perhaps we should cut the FTC's budget. I'm sure that would solve the problem, right Republicans?
This is one of the oldest scams out there. Claim to be collecting for a charity while using it to enrich yourself.
ReplyDeleteThere's even a version of this that the Republican party is attempting to bring back. It worked like this. Before the government got involved with public assistance there was a system of private charities. Now they didn't want to waste money using it to help people of immoral character, they were only in the business of helping the "deserving poor". The rub was that nearly every person who applied for assistance was declined because some sort of moral failing was always found (or made up on the spot.) Meanwhile the accounts of the charities in question were managed by individuals who paid themselves very generously to do so.